0:12Skip to 0 minutes and 12 secondsI would like to welcome you to this course: The Foundation of Innovation and Entrepreneurship in China. First of all, since this course is about China, let’s review some highlights of the demographics and economic development of China over the past 30 years. China has an enormous population and a huge market. For much of that time, the Chinese economy experienced double-digit growth. Over the past several decades, we can say that it has become the “Factory of the World”. Now China has become the second largest economy in the world in terms of Gross Domestic Product, or GDP. The Chinese economy now has a very strong effect on the rest of the world.

1:08Skip to 1 minute and 8 secondsHowever, in the past few years, the Chinese economy has slowed down and has experienced massive pressures. Why is that? To start to answer that question, we need to look at the GDP per capita, namely, the total GDP divided by the whole population. According to the World Bank, economic development normally undergoes three stages. The first is the low-income stage when GDP per capita is below 2,000 USD. The middle-income stage is when GDP per capita is from 3,000 to 9,000 USD. Thirdly, the high-income stage is when GDP per capita is over 17,000 USD. Where is China along in the process? Well, China currently is in the middle-income stage with a GDP per capita around 7,500 USD.

2:22Skip to 2 minutes and 22 secondsWhat is the typical situation of China in the middle-income stage? The Chinese economy has been heavily based on a low cost strategy over the past decades, but this low cost model is now recognized as not being sustainable. Labor, material, and land costs have all increased dramatically in China. It is increasingly difficult to compete with neighboring countries in terms of cost any more. In the near future, its manufacturing costs may even catch up with those in the United States. It is quite clear that the Chinese economy is facing difficulties in the middle-income stage. How can these problems be solved? How can China move forward to the high-income stage, instead of being stuck in what the World Bank calls “the middle-income trap”?

3:33Skip to 3 minutes and 33 secondsWell, the World Economic Forum has prescribed the recipe for rising to the high-income stage for China as well as other countries. That prescription is innovation. Innovation is the chief candidate to be the key driving force for the Chinese economy to move out of the middle income stage and ascend to the high-income stage of development.

4:02Skip to 4 minutes and 2 secondsSo that leads us to the next question: What is China’s innovation capability? The World Economic Forum (WEF) ranks countries’ innovation capability every year. In 2014, China was ranked just 30 in the world. Actually, it has been hovering around 30 for a few years without much improvement. That’s why China is now in great need of innovation-based entrepreneurship instead of low-cost based entrepreneurship as in the past 30 years. The country is working very hard to transition from a low-cost strategy to an innovation-based strategy. That is why innovation and entrepreneurship are very frequently discussed topics in China now. And that is also the reason this course covers both innovation and entrepreneurship. Thank you for watching.

Why is China in urgent need of innovation?

China has an enormous population and a huge market. For much of the past three decades, the Chinese economy experienced double-digit growth.

Due to the substantial increase in manufacturing in China in recent decades, we can say that it has become the ‘Factory of the World’. Now China has become the second-largest economy in the world in terms of Gross Domestic Product (GDP). However, in the past few years, the Chinese economy has slowed down and has experienced massive pressures.

That’s why China is now in great need of innovation-based entrepreneurship instead of low-cost based entrepreneurship as in the past 30 years. The country is working very hard to transition from a low-cost strategy to an innovation-based strategy. These are also the reasons why this course is called “Foundation of Innovation and Entrepreneurship in China”.

In 2016, China GDP per capita was around 8,200 USD and China was ranked 25 in innovation capability of the world.